Gold And Oil Price Are Soaring While Crypto Bleeds Due To Russia-Ukraine War

By Ambar Warrick
February 24, 2022 Updated February 24, 2022
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Russia’s declaration of war against Ukraine saw crypto market capitalization slump by $200 billion in a matter of hours, while stock and currency markets also tumbled. But not all sectors  were equally impacted.

Gold shines bright

Commodities, specifically gold and oil, have marked steep gains in recent weeks, and only rose further when the situation deteriorated.

Gold prices surged more than 2% after Russia’s declaration. The yellow metal is trading up nearly 8% this year, given its age-old status as a safe haven.

High inflation, coupled with expectations of U.S. interest rate hikes this year has also spurred renewed interest in gold, reinforcing its status as an inflation hedge.

Gold’s rise this year, along with Bitcoin’s decline, has quelled speculation that the latter could be an effective safe haven, or a buffer against inflation.

Oil blows past $100

Oil is another market that has greatly benefited from recent tensions. Crude prices rose past $100 a barrel for the first time in seven years, data from showed.

Investors fear any supply disruptions to Russian oil supply from the Ukraine conflict. As of 2020, Russia was the third-largest oil producer in the world, behind only the United States and Saudi Arabia, U.S. government data showed.

Europe is also the largest market for Russian oil, which is likely to put the bloc in a difficult position when responding to Russian aggression. Any sanctions the European Union has imposed so far have avoided the mention of crude supply.

Use commodities as a geopolitical hedge. Amid the risk of supply disruptions, broad commodities can be an effective geopolitical hedge (and) offer an attractive source of returns.

Mark Haefele, Chief Investment Officer Global Wealth Management at UBS

Safe spaces in foreign exchange

In times of political duress, the dollar is among the most sought-after safe havens in currency markets. This has seen the greenback add more than 1% this month, against a basket of currencies.

The Japanese yen and the Swiss franc have also benefited from safe-haven buying this year.

With more than five years of experience covering global financial markets, Ambar intends to leverage this knowledge towards the rapidly expanding world of crypto and DeFi. His interest lies chiefly in finding how geopolitical developments can impact crypto markets, and what that could mean for your bitcoin holdings. When he isn't trawling through the web for the latest breaking news, you can find him playing videogames or watching Seinfeld reruns. You can reach him at [email protected]
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.

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